Circana recently released its food and beverage industry update and predictions for the year ahead – a report highlighted by consumers’ continued shift to both private label and in-home meals. Here’s a brief look at the report’s findings.
2025 Forecast
“Consumers are driven by a demand for value, impacting both volume and price/mix growth,” said Sally Lyons Wyatt, global executive VP and chief advisor at Circana, in a press release. “We’re noticing that channels offering everyday value have become more influential.”
She added that e-commerce solutions, which increase convenience and price transparency, are driving 35% of the food and beverage dollar sales growth, even though they only hold a 10% market share.
Lyons Wyatt added that Circana expects consumers to continue to lean into private labels, which saw a 3% volume increase last year versus a 1% decline from mainstream brands, due to the fact that consumers are making a conscious effort to choose brands that deliver value.
The Government’s Influence
Circana’s report spotlighted myriad factors that could have a major influence on the industry in 2025. For starters, uncertainty around new government policies introduces a wide range of possible effects on industry costs, Circana noted.
Proposed immigration legislation and tariffs impacting wages, capacity, and import costs are all factors that could significantly impact the overall F&B industry in 2025.
Retailers and manufacturers face an uphill battle with stressed margins and increased public scrutiny on grocery prices. Success in this industry will require them to find a balance between value and incremental offerings.
The Wildcard Consumer
Although past behavior can often be used to predict the future, human behavior can be anything but predictable.
“Unscripted consumer behaviors add complexity to the market dynamics,” Lyons Wyatt noted.
“We’re seeing a shift from out-of-home dining, where traffic has fallen by 2%, to in-home meals, which rose by 1% in volume,” she noted. “Shopping patterns are also changing, with consumers making more trips, up 8.9%, but buying fewer items per trip – as much as an 11 percent decline – and shopping more perimeter categories (+2% volume).”
As consumers adopt more selective buying habits, they tend to purchase and stock up on some products less often, delay certain purchases, and switch to alternatives as they reassess spending from necessity and make more room for discretionary items, Circana noted.
Ultimately, Circana assumes a moderate slowdown in economic conditions, which include softer growth in the upcoming year than in 2024 for gross domestic product and disposable income, a slightly weakening job market, and stable consumer confidence, according to the press release.
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